SCOREBOARD: Greek relief

Well the good news is that Germany and France have adopted a united position on Greece – we can all relax. The Germans have nevertheless insisted on three conditions for any rescue package. Namely that aid would only be given if the Greeks couldn't get the money themselves in the market, the IMF would need to be involved and rules on debt and deficits would have to be toughened. An EU summit is being held later this week to nut out the details, but Spain and France have proposed eurozone leaders meet immediately before-hand to discuss.

By itself, this probably would have been sufficient to lift sentiment. But we also saw some decent profit numbers out of a UK insurer and cruise-line operator. When we add to that the rising global steel demand and news that iron ore prices could jump 90 per cent over the next month or so (as major suppliers move to shorten sales contracts), then punters became much more enthused about growth prospects.

European equities themselves finished up between 0.5 per cent-0.7 with US stocks closing a tad higher – S&P500 0.72 per cent (1174), Dow up 103pts (10888) and the Nasdaq up 0.8 per cent (2415). The SPI was up 0.7 per cent (4931). While all sectors on the S&P500 rose, the main outperformers were basic materials, industrials and tech stocks. Energy, utilities and healthcare were the main laggards.

On the rates side we saw a couple of interesting things – firstly the 10yr swap spread turned negative for the first time ever and then Treasury's $44bn 2yr auction attracted light indirect interest. These bidders took only 34.8 per cent of the issue compared to 53.6 per cent last month and an average of 46 per cent. Cover was about average at 3. Nevertheless, action on the major coupons was limited with ranges of about 4/5bps. At the close, the yield on the 2 and 5yr was up 1bp to 0.98 per cent and 2.42 per cent. The 10yr yield rose 2bps to 3.69 per cent. Aussie futures were equally boring dipping 2/3 ticks on a 4/5 tick range – 3s at 94.66 and 10s at 94.29.

Nothing much to say on the FX (Greenback up against Euro and Sterling, dipped against Australian dollar) and commodity moves were generally small as well – crude up 0.3 per cent ($81.87), gold up $3 ($1105), base metals mixed (copper down -0.1 per cent, nickel up 2.2 per cent and zinc up 1.1 per cent).

Other news and data included a 0.6 per cent fall in existing US home sales (market looking for a 1.1 per cent dip), while the Richmond Fed manufacturing index was slightly stronger at 6 from 2 (mkt 5), which is well above the average of 2.3. In the UK, inflation came in about expected rising 0.4 per cent (median 0.5 per cent) to give an annual rate of 3 per cent from 3.5 per cent (well above target). The retail price index which is more often used in wage negotiations etc was at 3.7 per cent y/y.

Not much for Australia today (DEWR skilled vacancy index) and prior to that at 0845 we get the New Zealand current account. Tonight is data heavy with US new home sales and durable goods. Then in Europe we get industrial orders, the German IFO survey and EC PMIs.